The council’s £31.6 million deficit is not a mystery, nor is it explained by the public reasons related to asylum seekers and/or Chagossian arrivals, National Insurance hikes or decisions the Labour government has made recently.

It is the result of different individual reasons, but three specific internal failures were all long predicted or known about:

A £17.8 Million “Starting Deficit”

The 2025/26 budget was approved in February based on the assumption the council had £24.5 million in reserves. This was wrong. In July, a “balance sheet review” found a £14.1 million “historical error”. This meant the council actually started the year with only £6.7 million, making the budget £17.8 million short from day one.

A £15 Million Failing Savings Plan

The “not sufficiently robust” budget was balanced on achieving an “unprecedented” £38.8 million in savings. That was twice the amount that the council had ever managed to save in any previous year. It was a high-risk plan and it is now collapsing. By August 2025, £13.6 million of this year’s savings plus £1.4 million carried over from last year were already rated “Red – Serious problems in delivery” or “Written Out” as undeliverable.

This is deeply concerning because the budget has now been proven to be “not sufficiently robust,” just as the finance chief warned in his February Section 25 report. With the council’s own reports now forecasting a negative reserve of -£24.9 million, this raises serious questions about how the budget complies with the council’s fundamental statutory duty to set and maintain a balanced budget.

A “Car Crash” IT Project

The council’s Oracle finance system, which manages the budget, has not been working. The interim Chief Finance Officer (Andy Goodwin) admitted to the Audit Committee in August it “has been a bit of a car crash“. This system failure led to the “poor data quality” that the previous Chief Finance Officer (Richard Ennis) warned about in February and which external auditors blamed in July for the council’s inability to make “properly informed decisions”.

Summary

These three internal failures, totalling over £32.8 million (£17.8m starting hole + £15m savings failure), account for the crisis that requires at least a £31.6m bailout.